Data: The M&A fog is lifting

The study identified strong optimism for the year ahead, with more than two-thirds of the executives surveyed expecting M&A to rise moderately, or even aggressively.

The converging oil-price expectations of investors and companies in the oil and gas sector creates a strong platform for mergers and acquisitions (M&A) deals to flourish, according to A T Kearney’s 2017 Oil and Gas M&A study.

The recently released report reveals a sharp rise in deals announced at the end of last year, although 45% of the $850bn-worth of transactions declared since January 2016 is still pending. The study identified strong optimism for the year ahead, with more than two-thirds of the executives surveyed expecting M&A to rise moderately, or even aggressively.

“In the Middle East, we expect to see an increase in M&A and partnerships in the oil and gas industry. National oil companies in the Gulf will continue to seek access to the key technologies and capabilities that they need to expand their domestic business and to create more value. In parallel, they will continue to explore partnership opportunities to secure access for their crude and fuel products in international markets, while capturing a larger share of the profit pool,” commented Ada Perniceni, partner, A T Kearney, and co-author of the study.

Worldwide, improved market conditions have sparked several mega-deals since 2016, including Sunoco’s $50bn purchase of Energy Transfer Partners, the $43bn merger of Enbridge and Spectra Energy, and a $32bn deal that combined GE’s oil and gas operation with Baker Hughes. With signs that investment prospects are improving, the study indicates that financial investors will be more active in 2017 and are open to new deal structures.

With oil prices holding steady and industry sentiment improving, investors are moving to capture acreage, secure midstream assets with reliable returns, and capitalise on opportunities in oil services. According to A T Kearney, the fog is lifting on the oil and gas M&A landscape, but the horizon remains hazy.